Yesterday, I watched Paranormal Activity and can easily say it was scarier than The Blair Witch Project.
However, I had no problem sleeping.
Paranormal Activity was definitely a well done movie, though it lacked the factor of "Oh my God, is this really happening?" that The Blair Witch Project had. From the moment the movie began, I knew it was acted, possibly scripted, with the chance of improvisation that Blair Witch had. The Movie developed from a typical ghost story to a demon possessing the young woman Katie, about 10 to 15 minutes into the movie. Perhaps more, but that's what it felt like. As the movie went on, the nightly hauntings became more and more evil, from banging on walls and floors to actually gaining control of Katie's body.